Iron Ore Market Review
The iron ore boom was in full force last year and has continued into 2007. The Raw Materials Group,
authors of the UNCTAD Iron Ore Trust Fund’s Iron Ore Market 2006-2008, highlight developments.
Iron Ore Demand
By Magnus Ericsson
Iron ore is used almost solely to produce pig iron and direct
reduced iron (DRI) – the main raw materials (together with coke)
about 711 Mt. Total iron ore exports have increased by approximate-
for the production of crude steel.
ly 92% since 1990. Exports by developed market economy countries
World crude steel production increased from 1,140 million tons (excluding Australia) have increased 4.6% while Australia’s have more
(Mt) in 2005 to 1,240 Mt in 2006, an increase of 8.8%. World pig than doubled (increasing by 150%). Exports (including trade between
iron production in 2006 was 871.5 Mt – an increase of 9.8%. DRI themselves) of the CIS republics rose by 51% between 1990 and
production grew at a lower rate to almost 60 Mt. All parts of the 2006. Chinese exports are zero and will remain so. Developing coun-
world experienced strong growth in steel demand, with increases tries accounted for 52% of total iron ore exports in 2006, their exports
particularly large in Europe and the NAFTA region. Production of
growing by 96% since 1990. The CIS republics represented 7.6% and
crude steel in China increased by 18% (to 419 Mt) which now
developed market economies accounted for the remaining 40%.
accounts for a third of world production.
Brazil managed strong growth of 10% to 247 Mt in 2006 whilst
All regions, including Europe and the Americas, experienced
Australia just managed to keep its position as the leading exporter
slight rises in production. In Europe production rose by 5.9% (211 at 248 Mt. Indian exports grew for the sixth consecutive year and at
Mt), Asia (excluding China) produced 286 Mt an increase of 4.3% 87 Mt, the country is now by far the third most important exporter –
and Africa saw a rise of 3.3% to reach 185 Mt. In the Americas clearly ahead of South Africa and Canada, the exports of which are
production increased slightly by 2% to 177 Mt. Among the larger both between 25–30 Mt. Swedish exports regained volumes lost in
producers, production fell only in Brazil (31 Mt), down 2.2%. recent years and reached 18Mt. In Africa, Mauritanian and South
Russia, Germany, India, Ukraine, Italy, Turkey and Taiwan all saw African exports increased marginally.
increases of more than 5% (in Turkey’s case by as much as
The return of Kazakhstan, Russia and Ukraine to the internation-
11.2%). The US saw an increase of 3.8% (98 Mt) and Japan
al iron ore export markets has proved successful during the last
3.3% (116 Mt).
couple of years. In spite of being landlocked, export initiatives
have progressed in recent years. Kazakhstan has also concluded a
WORLD PRODUCTION OF iron ore grew deal with China and exports in that direction have grown consid-
by 12% in 2006 to reach 1.5 billion erably in the last couple of years. The increase was 83% in 2006.
tons – a fifth consecutive all time high. Transport capacity is a limiting factor for expansion here, but
Since 1990, total growth of the iron recent history has shown that iron ore producers from the CIS are
ore market has been 65% or almost
600 Mt. More than a quarter of this
TABLE 1: WORLD IRON ORE PRODUCTION (MT)
growth took place between 2005 and
Country 2002 2003 2004 2005 2006
2006. In developed market economies
Sweden 20.3 21.5 22.3 23.3 23.3
(including Eastern Europe but excluding
Total Europe (excl. CIS) 24.4 25.3 26.2 30.1 30.7
Australia and Sweden) iron ore produc-
Kazakhstan 15.4 17.3 18.7 16.5 18.6
Russia 84.2 91.8 97.0 96.8 103.9
tion fell by 23% in the same period.
Ukraine 58.9 62.5 65.6 68.6 73.1
However, Australian and Swedish pro- Total CIS 158.6 171.6 181.3 181.8 195.6
duction has grown by 140% and 17%
Total Europe 182.9 196.9 207.5 211.9 226.3
consecutively. In the CIS republics, iron
Canada 30.9 33.3 28.6 30.1 34.1
ore production in the same period fell
USA 51.5 48.5 54.7 54.3 52.9
Brazil 225.1 245.6 270.5 292.4 318.6
by 17%, but the recovery in recent
Venezuela 20.9 19.2 20.0 21.2 22.1
years has been remarkable and produc-
Total Americas 350.4 371.3 400.2 425.2 454.8
tion has increased by 23% in the last Mauritania 9.6 10.1 10.7 10.7 11.1
five years. However, it is still far below
South Africa 36.5 38.1 39.3 39.5 41.2
the 250 Mt produced annually in the
Total Africa 51.8 53.3 54.3 55.3 57.1
mid-1980s.
India 86.4 99.1 120.6 145.5 165.0
Total Asia (excl. China) 103.0 116.4 139.7 167.9 190.6
China* 108.8 122.7 145.7 200.3 276.4
International Trade
Total Asia 211.8 239.1 285.5 368.2 467.0
International iron ore trade also
Australia 187.2 212.0 234.7 257.5 275.1
reached a new record level in 2006 as Total Oceania 188.9 213.9 237.0 259.8 277.3
exports increased for the fifth year in a
Total world 985.9 1,074.5 1,184.4 1,320.4 1,482.6
row and reached 759 Mt, up 6.1%.
* Iron ore production is converted, so that its iron content is about equal to that on average
in the rest of the world.
These figures include all export trade,
China ore production (unconverted):
including intra-CIS trade. Seaborne iron 231.4 261.1 310.1 426.2 588.2
ore trade increased by 9% in 2006 to
Source: UNCTAD
86 SEPTEMBER 2007 COMMODITIES NOW
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